Ivanhoe Completes Purchase of 10% Stake in Ensyn Petroleum

Ivanhoe Energy has concluded the acquisition of a 10% equity interest in Ensyn Petroleum International Limited and certain exclusive rights to deploy Ensyn's proprietary crude-oil upgrading process in several key oil producing countries.

"The formalizing of our alliance with Ensyn is an important step toward achieving our objective of utilizing new technologies to increase our oil production and reserves," said Mr. Martin, Ivanhoe Chairman.

Ensyn Petroleum International Limited is a Boston-based private company that has developed the Rapid Thermal Processing (RTP(TM)) technology that upgrades the quality of heavy oil by producing lighter, more valuable crude oil. The process produces a significant amount of by-product heat that can be used to generate steam for enhanced oil recovery (EOR) or for electricity. Terms of the Ivanhoe/Ensyn agreement are contained in Ivanhoe's December 18, 2003, news release.

In mid-2003, Ivanhoe and Ensyn entered into a contract to evaluate the process on heavy crude oil produced from Ivanhoe's South Midway Field near Bakersfield, California. The demonstration plant, now under construction near the South Midway field and expected to be operational in June this year, is designed to process up to 1,000 barrels of heavy oil per day. The plant also will test prospective heavy oils sourced from a variety of fields around the world.

Ensyn's RTP(TM) technology uses readily available plant and process components. The technology already has been successfully applied to continuous wood/biomass processing, with several commercial plants in operation. An Ensyn pilot plant in Ontario, Canada, has completed more than 90 test runs on heavy oil.